Australian Dollar Gains Ground After RBA Rate Announcement
November 30 2020 - 7:09PM
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The Australian dollar was higher against its major opponents in
the Asian session on Tuesday, after the Reserve Bank of Australia
retained its key interest rate and asserted to keep the record low
rate for at least three years.
The policy board of the Reserve Bank of Australia headed by the
governor Philip Lowe decided on Tuesday to leave its key rate
unchanged at a record low of 0.10 percent.
The central bank holds the target for the yield on the 3-year
Australian Government bond at around 0.1 percent and the parameters
of the Term Funding Facility and the government bond purchase
program.
The board will not increase the cash rate until actual inflation
is sustainably within the 2 to 3 per cent target range, the bank
said. Given the outlook, the board is not expecting to increase the
cash rate for at least three years.
The board will keep the size of the bond purchase program under
review, particularly in light of the evolving outlook for jobs and
inflation. The board said it is prepared to do more if
necessary.
The currency was further underpinned by rising risk appetite, as
continued optimism that progress in development of potential
coronavirus vaccines would hasten the pace of economic recovery
lifted the markets. Data showing that the manufacturing sector in
China continued to expand at a faster pace in November also boosted
sentiment.
In economic news, the latest survey from Markit Economics
revealed that the manufacturing sector in Australia continued to
expand in November, and at a faster rate, with a manufacturing PMI
score of 55.8. That's up from 54.2 in October and it moves further
above the boom-or-bust line of 50 that separates expansion from
contraction.
The Australian Bureau of Statistics said that the total number
of building permits issued in Australia in October was up a
seasonally adjusted 3.8 percent on month, coming in at 16,584. That
beat expectations for a decline of 3.0 percent following the 16.2
percent spike in September.
The aussie climbed to 0.7371 against the greenback, from a 6-day
low of 0.7338 seen at 5:00 pm ET. If the aussie continues its rise,
0.77 is possibly seen as its next resistance level.
Having declined to a 4-day low of 76.53 at 5:00 pm ET, the
aussie firmed to 76.97 against the yen. The aussie is seen finding
resistance around the 80.00 level.
The latest survey from Jibun bank showed that Japan
manufacturing sector continued to contract in November, albeit at a
slower pace, with a manufacturing PMI score of 49.0.
That's up from 48.7 in October although it remains beneath the
boom-or-bust line of 50 that separates expansion from
contraction.
The aussie rebounded to 1.6224 against the euro, from a low of
1.6252 set at 9:40 pm ET. Next key resistance for the currency is
likely seen around the 1.55 level.
The aussie held steady against the loonie, after edging up to
0.9563 at 6:45 pm ET. The pair had finished Monday's deals at
0.9547.
In contrast, the aussie dropped back to 1.0463 against the kiwi,
not far from a 7-1/2-month low of 1.0458 hit at 5:00 pm ET. The
aussie may find support around the 1.02 level.
Looking ahead, at 1:45 am ET, Swiss GDP data for the third
quarter is due out.
U.K. Nationwide house prices for November will be released at
2.00 am ET.
PMI reports from major European economies, German jobless rate
and Eurozone flash inflation for November are scheduled for release
in the European session.
Canada GDP data for the third quarter, U.S. ISM manufacturing
index for November and construction spending for October are due in
the New York session.
Federal Reserve Chair Jerome Powell testifies on the CARES Act
before the Committee on Banking, Housing, and Urban Affairs, in
Washington DC at 10:00 am ET.
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